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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: AllansAlias who wrote (42074)	3/2/2000 10:51:00 PM
From: pater tenebrarum	Respond to of 99985

Allan, technically the oil price has actually met a technical target i had in mind for this move, so i wouldn't be surprised if it corrected here for a while. Saudi Arabia , Mexico (not an OPEC member, but party to the current production quota agreement) and Venezuela seem prepared to push for an increase in the quota. however, there is some resistance to that idea within OPEC, e.g. Libya, Iran and Kuwait are opposed. too fresh is the painful memory of $11 oil. so i suppose that a compromise will be reached, and the question is if the increase in production will suffice to stop the inventory drawdown. don't forget, even the dovish OPEC members are scared to death that the price could possibly slide again...it is a LOW oil price that invites cheating, not a high one. so they have to perform a careful balancing act, and probably the industrialized countries will not be totally happy with the outcome of the upcoming meeting. then there's the wild card Iraq...Saddam is definitely in a position to throw a spanner into the works if he so chooses. i agree however that to squeeze too hard would be neither politically expedient nor economically feasible in the long run from the PoV of the biggies. but don't expect the Saudis to resume the role of swing producer...that hasn't worked in the past and i think the concept is out of the window forever. now as to the problems the oil industry in general seems to be experiencing, one can of course only speculate. anyway, the market seems bent on wanting to see hard evidence of lessening supply constraints...it can't be talked down anymore. regards, hb